Sir John Cowperthwaite was the main figure responsible for Hong
Kong's economic transformation, lifting millions of people out of
poverty. While scholars like Milton Friedman and F.A. Hayek put an intellectual case for the free markets, it was Cowperthwaite who
provided the textbook example showing laissez-faire policies leading
to swift economic development. His practical example provided
confidence to the Thatcher and Reagan governments, and was a key
influence in China's post-Mao economic liberalisation.

Cowperthwaite read classics at St. Andrews and Christ's College,
Cambridge. While waiting to be called up by the Cameronians (Scottish
Rifles), he went back to St. Andrews to study economics. This Scottish
education imbibed him with the ideas of the Enlightenment, especially
the work of Adam Smith, who had been born nearby in Kirkcaldy. He was a
liberal in the 19th century sense, believing that countries should open
up to trade unilaterally. In 1941, he joined the Colonial Administrative
Service in Hong Kong. When it fell to the Japanese, he was seconded to
Sierra Leone as a district officer, before returning in 1946 to help the
colony's economic recovery. "Upon arrival," the Far Eastern Economic
Review put it, "he found it recovering quite nicely without him." He
quickly worked his way up the ranks and was made Financial Secretary in
1961, in charge of its economic policy for a decade.

When he became Financial Secretary, the average Hong Kong resident
earned about a quarter of someone living in Britain. By the early 90s,
average incomes were higher than Britain's. Cowperthwaite made Hong Kong
the most economically free economy in the world and pursued free trade,
refusing to make its citizens buy expensive locally-produced goods if
they could import cheaper products from elsewhere. Income tax was never
more than a flat rate of fifteen percent. The colony's lack of natural
resources, apart from a harbour, and the fact that it was a food
importer, made its success all the more interesting. Cowperthwaite's
policies soon attracted the attention of economists like Milton
Friedman, whose television series Free to Choose featured Hong Kong's
economic progress in some detail.

Asked what is the key thing poor countries should do, Cowperthwaite
once remarked: "They should abolish the Office of National Statistics."
In Hong Kong, he refused to collect all but the most superficial
statistics, believing that statistics were dangerous: they would led the
state to to fiddle about remedying perceived ills, simultaneously
hindering the ability of the market economy to work. This caused
consternation in
Whitehall: a delegation of civil servants were sent to
Hong Kong to find out why employment statistics were not being collected;
Cowperthwaite literally sent them home on the next plane back.

"Cowperthwaite made Hong Kong
the most economically free economy in the world and pursued free trade,
refusing to make its citizens buy expensive locally-produced goods if
they could import cheaper products from elsewhere."

Cowperthwaite's frugality with taxpayers' money extended to
himself. He was offered funds from the Hong Kong Executive
to do a much needed upgrade to his official residence, but
refused pointing out that since others in Hong Kong did not
receive that sort of benefit, he did not see why he should.

Cowperthwaite's hands off approach, and rejection of the in
vogue economic theory, meant he was in daily battle against
Whitehall and
Westminster. The British government insisted
on higher income tax in Singapore; when they told Hong Kong
to do the same, Cowperthwaite refused. He was an opponent of
giving special benefits to business: when a group of
businessmen asked him to provide funds for tunnel across
Hong Kong harbour, he argued that if it made economic sense,
the private sector would come in and pay for it. It was
built privately. His economic instincts were revealed in his
first speech as Financial Secretary: "In the long run, the
aggregate of decisions of individual businessmen, exercising
individual judgment in a free economy, even if often
mistaken, is less likely to do harm than the centralised
decisions of a government, and certainly the harm is likely
to be counteracted faster."

His ability to pursue policies which, at the time, were
deeply unfashionable, was helped by having supportive Hong
Kong Governors, Sir Robert Black and Sir David Trench, who
both had free market sympathies. Moreover, Cowperthwaite was
formidable at arguing his case: as Dennis Healey recalled:
"I always retired hurt from my encounters with the
redoubtable Financial Secretary."

From 1972 to 1981, Cowperthwaite was an advisor to Jardine
Flemming & Co in Hong Kong. He retired to St. Andrews with
his wife Sheila and was an active member of the Royal &
Ancient. For many years, he spent six months of the year
with his wife traveling the world visiting friends and
relatives. He was an old school civil servant and, much to
the frustration of economists, resisted requests to write an
autobiography about his time in Hong Kong, believing that
his duty was to serve, not to reveal the minutiae of
government business.

John James Cowperthwaite KBE OBE CMG, Financial Secretary of
Hong Kong, born 25 April 1915; died 21 January 2006.